Management Science 3.

Queuing Theory - Studying waiting lines

and service systems to improve
Midterm Reviewer
efficiency in processes.
 Management Science 4. Decision Analysis – Using decision trees
 an interdisciplinary field that applies 5. Game Theory - Analyzing competitive
quantitative methods to solve complex situations where result depends on
organizational decision-making problems. decision-makers.
 It aims to improve managerial decision-  Linear Programming
making by providing tools to address issues  Use of Linear Programming:
related to operations, resource allocation, I. Optimization in Business and
and production. Economics
 Key Aspects of Management Science a. Profit Maximization and Cost
1. Quantitative Analysis – Man Sci uses Minimization - to decide how to
mathematical models, statistics, and allocate resources in order to
algorithms to analyze data and forecast maximize profits or minimize costs.
outcomes. b. Inventory Management - decide the
2. Optimization - It focuses on finding the optimal quantity of goods to
best solutions. produce and store while minimizing
3. Problem-Solving Frameworks - It storage costs.
provides frameworks to address both c. Product Mix Optimization - to
routine and non-routine management determine the best combination of
problems. products to produce, given limited
4. Interdisciplinary Nature - Management resources
science integrates knowledge from II. Supply Chain and Logistics
various fields like economics, a. Transportation Problems - to
engineering, operations research, and minimize transportation costs when
computer science. moving goods from several suppliers
5. Applications: to destinations.
1. Operations Management – b. Facility Location - decide where to
Optimizing production locate warehouses, factories, or
2. Supply Chain Management - retail outlets to minimize transpo.
Efficiently managing the flow of costs.
goods and services. c. Production Scheduling - to schedule
3. Financial Decision-Making - Helping production processes
with budgeting, investment III. Manufacturing and Production
decisions a. Resource Allocation - decide how to
4. Human Resources - Improving allocate limited resources
workforce management b. Blending Problems - to determine the
5. Marketing and Sales - Assisting in best mix of ingredients or raw materials.
pricing strategies, market research, IV. Finance and Investment
and sales forecasting. a. Portfolio Optimization - to
 Tools and Techniques Used in Management determine the best allocation of
Science: assets to maximize returns and
1. Linear and Non-linear Programming – minimize risk
Mathematical methods used to solve b. Capital Budgeting - helps in the
various constraints. selection of projects or investments
2. Simulation - Modeling real-world systems that maximize returns within a
to analyze their behavior over time. limited budget
V. Telecommunications 4. Decline - declining sales and profit;
a. Network Design and Routing - to product might be dropped or replaced.
design communication networks in
ways that minimize costs  Decision Making
b. Bandwidth Allocation - help allocate  BREAK-EVEN – a condition wherein the
network bandwidth optimally to production of a firm is not earning, but it
different users or services while also means that it is not losing. (Zero Profit)
minimizing congestion or delay.  Total Revenue = Total Cost
VI. Agriculture  (TR=PricexQuantity)=(TC=TFC + TVC(VCxQ))
a. Crop Planning and Resource  Formula: PxQ=TFC+(VCxQ)
Allocation - helps farmers decide  Total Profit = Total Revenue – Total Cost
which crops to grow and how to
allocate resources to maximize
profits or yield.
b. Feed Mixing - to determine the best
 Decision Tree
combination of feed ingredients  Visual representation of choices,
VII. Energy and Utilities consequences, probabilities, and
VIII. Transportation opportunities.
IX. Healthcare and Medicine  - choices
X. Education and Research - probability
XI. Government and Public Sector // - connect outcomes to their choices
XII. Environmental Sustainability
 Basic Concepts: Objective Function, Decision
Variables, Constraints, Feasible region,
 Productivity
Parameter, Linearity, and Nonnegativity
 a measure of performance that compares
the output of a product with the input, or
resources, required to produce it. The input
 Operations Strategy may be labor, equipment, or money.
 Specifies how operations can help  Productivity Measures
implement the firm’s corporate strategy. It 1. Labor Productivity - measures the output
links long and short-term operations produced per unit of labor input (typically
decisions to corporate strategy. per hour or worker)
 Corporate Strategy - defines the Formula:
business(es) the company will pursue, new Total Output (e.g., units produced
opportunities and threats in the Total Labor Input (e.g., hours worked)
environment, and the growth objectives it 2. Capital Productivity - measures the output
should achieve. produced per unit of capital input (e.g.,
 STAGES OF PRODUCT LIFE CYCLE machinery, equipment, or capital
1. Introduction - Sales begin, production and
investment).
marketing are developing, profits are
Formula:
negative.
Total Output (e.g., units produced)
2. Growth - sales grow dramatically,
Total Capital Input (e.g., capital investment)
marketing efforts intensify, capacity is
3. Material Productivity - measures the
expanded, profits begin.
output produced per unit of material input.
3. Maturity - production focuses on high
Formula:
volume, efficiency, and low costs;
Total Output (e.g., units produced)
marketing focuses on competitive sales
Total Material Input (e.g., total materials
promotion; profits are at their peak.
used)
4. Total Factor Productivity (TFP) - a
comprehensive measure of productivity that
considers the contributions of all inputs,
such as labor, capital, and materials.

TFP = ____ Y_____

⍺ β γ
K L M

 Pareto Principle
 Pareto Principle - a concept that specifies
that 80% of consequences come from 20%
of the causes, asserting an unequal
relationship between inputs and outputs.
- Developed by Italian
economist Vilfredo Pareto
(1906), dubbed by Joseph
M. Juran (1940s)
 Advantages:
1. Pinpoints who to reward and what to fix
2. Provides a guide on how to allocate
resources.

 Disadvantages:
1. May not always be accurate as it is
derived from anecdotal evidence rather
than scientific.
2. May lead advisors to replicate the top
20% of their clients

 Steps in Pareto Principle

1. Enumerate the rates of problems in
descending order.
2. Get the cumulative total
3. Prioritize the 80% of the problem
(lower than 80%)
4. Distribute the number of complaints
according to their percentage.
5. Multiply the total of distributed
complaints on the given rate (ex.
plans to reduce complaints by 25%
in these three categories)
*End of the steps.*